A Company with a Current Ratio of 2

question 154

Multiple Choice

A company with a current ratio of 2.75 means that the company:

• A)has $2.75 of quick assets to pay each $1 of current liabilities.
• B)has $2.75 of current assets to pay each $1 of current liabilities.
• C)has $1.00 of quick assets for every $2.75 of current liabilities.
• D)has $1.00 of current assets for every $2.75 of current liabilities.

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Definitions:

Consumption Options

The variety of goods and services that consumers have the ability to purchase and use.

Isolate Purchases

involves separating specific buying transactions for closer analysis or for special treatment in accounting or analysis.

Mental Accounting

A concept within behavioral economics that refers to the way individuals categorize, separate, and evaluate financial activities, often leading to irrational decision-making.

Irrational Decisions

Choices made contrary to or without consideration of the available evidence or logic.